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What’s Paying Off

Treasury decision making is getting better, aided by reports that key on real drivers and present actionable analyses. However, a survey of practitioners shows the most useful reports are not necessarily high-tech, vendor-delivered or graphically sophisticated, but homegrown and highly tailored.

Using a Kyriba treasury workstation and several applications built in-house, $1.5 billion Fifth & Pacific (formerly Liz Claiborne) in New York now tightly manages borrowings under its asset-backed line of credit, reports John Engeman, assistant treasurer and vice president. Separate cash, debt and borrowing base forecasts are combined into a “borrowing base availability forecast that predicts how much we can borrow without jeopardizing availability covenants,” he says. “This report is reviewed regularly with the CFO and used to plan the amounts and timing of cash flows.”

At $1.8 billion REI in Kent, Wash., a homegrown and largely manual compilation of vendor terms and discounts influences key decisions, says corporate treasurer Russell Paquette. With information scattered in multiple files, formats and systems, a holistic strategy and consistent application of policy was impossible. The tool at first relied on manual input into a spreadsheet but has been semi-automated by a new ERP system. One result, Paquette says, was to enable REI to “negotiate for early payment discounts where we found vendors already had accelerated terms and [to] standardize terms and discounts across multiple departments purchasing from the same vendor.”

Simply knowing what drives your business can lead to reports that better support potential actions, even when the process is low-tech. The driver at the Columbus (Ohio) Airport Authority is enplaned passengers, reports Randy Bush, director of finance and administration. His staff closely monitors the flow of people boarding planes, which “helps us plan infrastructure improvements and drives our forecasts of non-airline revenues.” It is also used “as a benchmark to compare our costs to other airports,” he says.

Vendor technology improved analytical reports at $4 billion PulteGroup in Bloomfield Hills, Mich., reports Dory Malouf, treasury cash operations manager. Bank fees on transactions are tracked in its Kyriba treasury workstation. When account analysis statements arrive electronically from Pulte’s banks, it’s easy to spot discrepancies in volumes and fees. But the big payoff has been the time saved by not doing manual reviews, as well as the visibility into underutilized accounts and services, Malouf says. “We saw where we could close 68 accounts and bring our total down to 100.”

Canned reports can be generic, while industry- and company-specific reports offer more value. Terry Smith, CFO at $150 million Carlile Transportation Systems in Anchorage, Alaska, explains that by integrating its ERP system into its SQL data warehouse, Carlile got “the detail we needed to act and cut our uninvoiced backlog of freight bills from 15,000 to less than 3,000.

"Each freight bill, on average, is worth $450 to us, so we were able to create a significant amount of cash by integrating these solutions,” says Smith, who's pictured at right.

Sometimes analytic reporting involves using more features of readily available software. “We have automated several processes by using the reporting and database capabilities of Lotus Notes,” says Corey A. Deible, controller at $206 million Lindy Paving in New Galilee, Pa.

Sophisticated mathematics also can be useful. Frank Fiorille, director of risk management at $2 billion Paychex in Rochester, N.Y., notes that “by adding algorithms to our many predictive models, we helped our branches move beyond experience and intuition to more informed retention strategies.”

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